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What Makes Sociedad Quimica (SQM) Stock a Solid Choice Right Now

Sociedad Quimica y Minera de Chile S.A.’s SQM stock looks promising at the moment. It is benefiting from higher prices across most of its business lines and healthy demand.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.

Sociedad Quimica carries a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors.

Let’s take a look into the factors that make Sociedad Quimica an attractive choice for investors right now.

Price Performance

Shares of Sociedad Quimica have surged 96.6% year to date against the 22.9% rise of its industry. It has also outperformed the S&P 500’s roughly 14.4% decline over the same period.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Estimates Northbound

Over the past two months, the Zacks Consensus Estimate for Sociedad Quimica for 2022 has increased around 1.5%. The consensus estimate for fourth-quarter 2022 has also been revised 7.3% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Solid Growth Prospects

The Zacks Consensus Estimate for earnings for 2022 for Sociedad Quimica is currently pegged at $13.13, reflecting an expected year-over-year growth of 540.5%. Moreover, earnings are expected to register an 237.2% growth in the fourth quarter.

Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Sociedad Quimica is 83.9%, well above the industry’s level of 35.1%.

Upbeat Prospects

Sociedad Quimica is gaining from favorable trends in the lithium market underpinned by strong electric vehicle sales. The expansion of lithium operations is also supporting the company’s lithium sales volumes. Strong demand and limited supply are also boosting lithium prices.

The company, in its third-quarter call, said that it envisions lithium demand to grow at least 40% in 2022 factoring in strong electric vehicles sales in China. It expects sales volumes to be more than 150,000 metric tons this year. The company also expects the high pricing environment to continue for the balance of 2022 and into 2023.

Iodine volumes are also being supported by growing demand following the post-pandemic recovery. In Iodine and Derivatives, the company expects demand growth to reach roughly 2-3% in 2022.

Higher realized prices and strong demand are driving the company’s results as witnessed in the third quarter. Revenues from the Lithium and Derivatives segment surged more than twelvefold year over year to $2,334.9 million in the quarter. The upside was driven by significantly higher prices and volumes. The Specialty Plant Nutrients segment also saw a 28% increase in revenues to $292.5 million, driven by higher prices. The momentum is expected to continue in the fourth quarter.

 

Sociedad Quimica y Minera S.A. Price and Consensus

 

Sociedad Quimica y Minera S.A. Price and Consensus
Sociedad Quimica y Minera S.A. Price and Consensus

Sociedad Quimica y Minera S.A. price-consensus-chart | Sociedad Quimica y Minera S.A. Quote

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. STLD, Olympic Steel, Inc. ZEUS and Commercial Metals Company CMC.

Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.

Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 74% in a year. The company currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel currently carries a Zacks Rank #1. The consensus estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days.

Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 65% in a year.

Commercial Metals currently carries a Zacks Rank #1. The Zacks Consensus Estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.

Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 53% in a year.

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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report

Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report

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Olympic Steel, Inc. (ZEUS) : Free Stock Analysis Report

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